Research articles can offer a significant amount of information and serve as a strong force for progress in many areas. However, researchers should evaluate strong and weak points of the article that they want to use before citing it in their study. In the field of business ethics, the articles about corporate governance often investigate a single area or a place. For example, in the article published in 2015 and called “Corporate Governance and Its Reform in Hong Kong: A Study in Comparative Corporate Governance,” Michael and Goo explore various data from a number of sectors of Hong Kong corporate governance. The authors focus on the concepts of family ownership and self-dealing, with an intention to provide a new insight for other researchers. The purpose of this paper is to find the main strengths and weaknesses of this article as well as determine the article’s importance and implications to society.
Article Summary
The authors of the article discuss the state of corporate governance in Hong Kong with an intention to compare the experiences of the companies in this area to the general information about corporate governance systems of the world. They look into the recent data on the topics of family control and self-dealing, pension investments, and minority shareholders. According to the authors, a significant amount of companies in Hong Kong are owned and controlled by families. They present data showing that families control about seventy percent of publicly traded companies (Michael & Goo, 2015). This information leads authors to suggest that such corporate governance may concentrate on family-oriented decisions and ignore the interests of others. The authors claim that companies with higher levels of family control are not affected by independent directors and, thus, can have problems with earning management. Such governance can also result in self-dealing, which in turn leads to tunneling and misinformation about company’s transactions. To deal with these problems, the authors suggest involving minority shareholders and pension funds and making transactions more transparent to everyone.
The authors also present two issues that are not present in Hong Kong but appear in companies of other cities: high executive compensation and accounting and auditing problems. According to the data, the salaries of persons in executive roles in Hong Kong are rather moderate in comparison to international rates. The authors say that companies with excessive remuneration for executives may have problems with their corporate governance because people in executive roles can influence other workers into agreeing to a higher executive pay. However, executive pay in Hong Kong remains restricted. The second issue, which does not affect Hong Kong companies significantly, is connected to accounting and auditing weaknesses. Michael and Goo (2015) suggest that the presence of independent directors on audit committees and tight controls lead Hong Kong companies to make investors feel secure.
Strong and Weak Points of the Article
The article has some strong and weak points. The first high point of the article is the abundance of information collected by the authors. The authors present many data findings and discuss the points made by various authors. The readers can see the information on multiple research problems, including the state of family-owned businesses and transaction transparency. Moreover, Michael and Goo (2015) investigate the state of corporate governance in Hong Kong very thoroughly, focusing on particular points and avoiding excessive generalization of the topic. The authors define a topic and present the information in a structured and logical way. The next advantage of this article lies in the recency of the discussed information. The authors make sure to point out the most recent findings and concentrate their attention on new theories and numbers. For example, while talking about the problem of shareholder litigation, the authors consider only the most recent cases, which took place since 2010, to present the current state of businesses in Hong Kong. The language of the article can also be considered its strong point. The information is introduced in a way that can be understood by non-professionals in the areas of accounting and law.
The readers, however, also have to consider some weak points of this article. First of all, some data presented in the text is not delivered in a clear way. Some tables and figures fail to show the exact information, which is needed to understand the points that the authors are making. For example, figure 10 illustrates the manipulation of earnings in a company depending on the type of company control (Michael & Goo, 2015).In this figure, the information is demonstrated in a chart that is hard to read. Some figures do not have precise numbers when the information in the text needs it. Such tables may include percentages and pay rates. Furthermore, some information is discussed in the text but not supported by any evidence, which can also be a disadvantage of this article. While talking about the rate of family-owned companies in Hong Kong, the authors mention the comparison between Hong Kong and the UK, USA and European countries. However, they never present the facts or any supporting evidence. The last possible weak point of this article is the fact that authors still draw many conclusions, although they claim to present data in an unbiased way.
Possible Implications and Importance for Society
This comparative study offers a lot of information on the topic of corporate governance of Hong Kong companies. It also has many references to other texts and studies. This article can be considered as a good starting point for researchers and businesspersons, who want to explore the state of Hong Kong company structure. The language of the article is simple and lets the readers quickly find and understand the main ideas of the text. Other authors can use the information in this paper in their research because the there is a lot of data that can be discussed further. Moreover, the authors of this article expect for other researchers to draw their conclusions from the presented information. The following research may include comparing corporate governance of Hong Kong with this structure in other Asian or non-Asian regions or comparing recent information with data from other historical periods. Furthermore, some researchers may look deeper into one of the issues found in this paper and provide their own conclusions.
There is also practical importance to this article. The data presented in the text can be used by policy makers and employers of Hong Kong and nearby areas. Policy makers can base their propositions about changing corporate governance rules on this article to convince the public and provide everybody with necessary information. Businesspersons can use this article to look at their company from a new angle and see if they can make any changes to the system. The importance of this article for society, in this case, is significant, as this paper can influence the state of corporate governance not only in Hong Kong but also in other areas. Employers and employees in other Asian countries can look at the data findings in this paper as an example of good and bad sides of corporate governance. For example, the authors present two issues that are not present in Hong Kong companies. Companies of other countries that experience these issues can see if the solutions presented in this article can help them to solve these problems.
Conclusion
The article “Corporate Governance and Its Reform in Hong Kong: A Study in Comparative Corporate Governance” presents a significant amount of data about the companies of Hong Kong. The authors focus on the topic of corporate governance and its issues of family control, transparency and self-dealing in Hong Kong. The article has some strong points. First of all, the text contains a lot of useful data. Moreover, this data is thorough, recent, and easy to understand. However, in some places, the authors’ findings are not presented well enough or are followed by possibly biased conclusions. These weak points should be noted. All in all, this study is an important piece of information for society, both for theory and practice. It can help researchers, activists, and businesspersons to look into the state of corporate governance in Hong Kong and other areas, propose new solutions to the discussed issues, and compare the situation of Hong Kong companies to the state of other businesses.
Reference
Michael B., Goo S. H. (2015). Corporate governance and its reform in Hong Kong: A study in comparative corporate governance. Corporate Governance, 15(4), 444-475.